Uncover - S12: "A Death in Cryptoland" E4: Voleur

Episode Date: December 10, 2021

Despite Michael Patryn’s denials that he’s a fraudster named Omar Dhanani, customers aren’t buying it. They’re demanding proof. A mugshot. A secret service agent, a felon-turned podcaster, and a childhood friend tell the story of Omar, the man Michael insists he’s not. For transcripts of this series, please visit: https://www.cbc.ca/radio/podcastnews/a-death-in-cryptoland-transcripts-listen-1.6035764

Hi, I'm Caitlin Prest, and I am here in your ear to tell you about a very incredible show called Asking For It. Asking For It is a darkly comedic series that follows a queer femme singer whose herstory of violence finds her no matter how many times she runs away. It has an original soundtrack, and it'll make you laugh, cry, and feel a little bit less alone. Asking for it. Subscribe now. This is a CBC Podcast. On a humid night in July 2003, a guy named Albert Gonzalez arrives at an ATM in New York. He's standing at an ATM machine. He's standing at an ATM machine, he's taking a white plastic card, putting it in an ATM machine, pulling out $20 bills, taking the 20s, stuffing them into a backpack. 40 minutes at an ATM machine. 40 minutes. He stands there.

But what Albert doesn't realize is that he's inadvertently attracted the attention of a police officer. One who in all likelihood was thinking, What the hell is this kid doing? But what really grabs the cops' attention is the getup Albert's wearing. Albert's wearing a wig. He's got a disguise on. Kid, what are you doing? He's wearing a woman's long-haired wig, some costume jewelry, and a fake nose ring. The phony hair would later be described as stringy.

Having seen enough, the policeman approaches Albert and arrests him on the spot. He's carrying a stack of phony bank cards. Albert Gonzalez would prove to be a real catch. The 22-year-old had become accustomed to concealing his identity. Online, he hid behind aliases such as Kumbhajani and his personal favorite, Soup Nazi. Albert was one of the top players in a criminal cyber forum called Shadowcrew.com. It was an online bazaar where you could purchase stolen credit card numbers. You could purchase specific ATM cards with pins attached, counterfeit identification documents, names, addresses, data births, social security numbers. Really anything that you could use to commit small-scale or large-scale financial crime and identity theft.

And Albert had valuable intel on the international enterprise. All kinds of dirt on the other bigwigs running the operation. Albert falls apart right there, gets arrested, flips, goes to work for the Secret Service. flips, goes to work for the Secret Service. And what happened was, Albert, they asked him, how can we catch these guys? Guys like one Omar Danani of Huntington Beach, California. I'm Takara Small. This is A Death in Cryptoland. Chapter 4

Valour. The co-founder of Quadriga CX, Michael Patron, had done what he could to distance himself from the specter of Omar Dhanani. Omar was the fraudster people on Reddit were saying was actually Michael. But when the company announces that its CEO, Gerald Cotton, has died suddenly in India, and well over $200 million are missing, there's no escaping the accusations. Michael repeatedly said it was a mistake, that people had confused him with another man. He called them slanderous rumors.

But customers weren't satisfied. Because if there was any possibility that Michael Patron was Omar Danani, they'd have questions. Questions like, could a felon have been at the helm of Cadriga CX from the beginning? I think the idea of giving your identifying information to a company that was co-started by a guy who's been accused of being involved in a large scheme of identity theft is concerning. There were entire flowcharts on Reddit from some individuals who had gone to great lengths to attempt to prove that Michael Patron was actually Omar Dhanani. And Redditors want photo evidence.

The best way to verify if Michael Patron is Omar Dhanani would be a mugshot. There must be one of Omar Danani somewhere. Can anyone track one down? At that moment, that's exactly what the Globe and Mail reporters Alexandra Pozadsky and her colleague Joe Castaldo are trying to do. To put an end to the speculation, one way or the other. That's one way to show it's the same person. But as a journalist, you're always second-guessing and triple and quadruple checking things.

You want to get it right. We wanted to find out more about who Omar Dhanani was, so we tracked down some former classmates. up more about who Omar Danani was, so we tracked down some former classmates. We became acquaintances because we were both kind of nerds, I guess. I think it must have just been like my parents or something were trying to get me to be social and his parents might have been doing the same thing. This is Andy. He lives in Huntington Beach, California. He went to school with Omar Dhanani. That's why when he was at work one day

going down rabbit holes on Reddit, rumors about Omar jumped out at him. And so I'm sitting there wasting time, enjoying. And then the instant I fell across that Omar Dhanani, I knew that kid in fifth grade. It blew my mind. It brought back a lot of memories for him. It all started, for sure, in 1995 and 1996 when the internet started coming out and Omar embraced it. But he embraced it in dark ways.

Andy remembers the first day Omar showed up at their elementary school. It was lunchtime and I was just hanging out playing with my buddies and him and his dad walked across the blacktop towards the main office and they stuck out to me because they were both dressed in suits, which was uncommon. I was like, you know, who are those people? Huntington Beach is your quintessential surf town. Laid-back vibe, sandy coastline, crashing waves. It's about an hour south of Los Angeles. From the beginning, Andy could tell Omar was different. But I mean, right out at the gate, this new kid was like, oh, he's a weird troublemaker.

At first, they hung out. You know, the funny thing about that is I don't even remember, like, why we became friends or anything. Like, what was I doing over at Omar's apartment with my super Nintendo? But then things soured. When he came to my house, we were playing on my computer, and I couldn't find a computer game that I wanted to play. It was driving me nuts, and I ended up looking in his bag, and I found a bunch of games of mine in his bag, and I found also all my X-Men cards in there. I emphasize the X-Men cards because those are my pride and joy. X-Men cards because those were my pride and joy.

And I had like the full set. And my full set of X-Men cards was sitting in his bag with all my computer games. And I'm just like, Omar, man, what's all my stuff doing in your bag? Oh, I'm sorry. I'm sorry. And ever since then, you know, I didn't want to hang out with that guy. It kind of sounds like you still got some bitterness over this. Omar Janani got a reputation as a troublemaker,

a distinction he'd carry with him into high school. He got a job in the school cafeteria working the food cart. According to a number of people we've talked to, Omar was running a scheme where for some of his pals, he would dole out too many burritos and too much change. What Omar would do, if he was honest, would give the kid his burrito and $2.50 of change. But instead, Omar would give the kid like two or three burritos and $20, $30, or sometimes they would get really greedy

and $40 bucks or $50 or $60 bucks. Those who were in on it, his buddies, would then kick back some of the money to Omar, splitting the proceeds. As you can imagine, the ploy didn't last very long. There are various stories about how things went off the rails, whether Omar quit before getting caught or whether he was fired. But the scam itself, people seem to agree on. Former classmates also tell us Omar became well-known as a hacker. And Andy remembers Omar using the handle Patron. Omar ended up at another high school.

But one time, he came back for a visit. Me and my buddies were hanging out one day after school, and Omar comes rolling up. I don't remember the exact car. I want to say it was like a Maserati. But it was like the nicest sports car I had ever seen in my life with my own eyes. And he comes rolling up in this car and he gets out of it. And I'm all, what the fuck is what I'm thinking in my head? Because like, what is this all about? And Omar is dressed to the nines like a gangster and shiny shoes and everything.

And we're just teenagers looking back on it like, oh my gosh. But anyways, so I couldn't believe it. And he's all, what's up guys. How's it going? How's it going? And Omar wanted to be accepted a lot. And he really wanted to make friends and stuff like that, because I'm sure a lot of people, he didn't make a lot of friends. He probably made a lot of enemies, like my experience was with him. But he really wanted to be liked or whatever. And so he was kind of bragging with all of that stuff. I feel like he's just a kid I know, which is interesting.

I don't see him as good or bad. I just see him as kind of an innocent kid that is headed down the wrong road. A road which would lead Omar to graduate from stealing lunch money to laundering cash. Now, the people out there in podcast land who have been listening already know the spiel. For those who don't... This is a podcast that's produced by a guy who has a

sizable prison record. Welcome to the first episode of Anglerfish, where we examine the darkest corners of our online lives. I'm your host, Brett Johnson. The United States Secret Service called me the original internet godfather. He loves saying that. Brett's been convicted of dozens of felonies. I built the first organized cybercrime community. It was called Shadow Crew. Shadow Crew was that cyber marketplace which serviced the underworld. The one Albert Gonzalez had been part of.

The guy in the wig who was busted at the ATM machine. It was an eBay for criminals. It began in 2002 during the pioneering days of internet fraud. Oh, he's there. He's here. When my producers and I talk with Brett on a video chat, he's got closely cropped hair and a goatee. He's straight out of central casting for a bad guy in a TV movie of the week. Hi, Brett. Hello, Brett.

Hello, how are you? Brett seems to love a captive audience. What's the weather like where you're at right now? Well, the weather, it's Alabama weather. So it's hot, humid, and racist. That's Alabama. It's like someone took a snapshot of the 1950s and just kind of left it there to ferment.

Welcome to Alabama. His alias back on Shadow Crew was Gollum Fun. He tells us how he came up with it. So I went to university. I went to UK and I went for English Lit. And I'm a huge Lord of the Ring fans. So when it came time to come up with a screen name, I really liked the character Gollum. I love that little guy.

So I was like, Gollum! Gollum what? It can't just be Gollum. So it became Gollum Fun. Today he bills himself as a cybercriminal-turned-good-guy, a consultant. But back then, the way Brett describes it, he was like the CEO of a vast enterprise, always on the lookout for decent talent, a.k.a. reliable bad guys.

People who could do things like provide stolen credit card numbers that actually worked. There's three necessities to committing successful cybercrime. Those three necessities are gathering the data, committing the crime, and then cashing out. The cashing out aspect is the most important, and that's where Omar Dhanani comes in. So he was a money mule, okay, first and foremost. By mule, he means someone who can help people launder their money. It was an important service, Brett says, because back then banks were getting good at identifying cash that was coming from illegal

sources. So the crew had to be creative. We didn't have cryptocurrency in order to move massive amounts of value. All right. So I don't call cryptocurrency cash or currency because it's not especially Bitcoin. It's not. It's just a means to transfer value. All right. So we didn't have that back then. What we had, though, is we had e-gold and then we had Liberty Reserve. E-gold is a precursor to today's cryptocurrency. The only thing that e-gold lacked was the blockchain. And for those who don't know, blockchain... No digital ledger, but otherwise e-gold was similar in principle to Bitcoin. People could anonymously fund accounts with their national currency, which would then be converted to e-gold. It was a virtual payment system, sort of like PayPal.

Omar Janani, who went by Valour, the French word for thief, began providing a pretty decent service, Brett says. Omar began offering a debit card, a prepaid debit card. What he was doing was, is he would say, send me your ego. You would send ego, say you sent $500 worth of ego, you would send him $500 worth of ego. He would charge maybe 5, 8%, and then he would put $450 US dollars onto the prepaid debit card.

So you could take it to an ATM and cash it out. For criminals wanting to hide where their cash was coming from, Omar's scheme was a popular one, and he'd go on to become one of the leaders running Shadow Crew. But law enforcement would eventually catch up to Omar and his co-conspirators. Because though it was a sophisticated international criminal network, inevitably, someone was bound to screw up. And that's exactly what happened when Albert Gonzalez got caught at that ATM, in his conspicuously weird disguise, stealing cash with fake bank cards. It was the summer of 2003 that the 22-year-old would become an informant for the Secret Service. And that's how Operation Firewall began, the mission to take down Shadow Crew.

The mission to take down Shadow Crew. stories to tell. I'm Jeff Turner, and I'm back with season three of On Drugs. And this time, it's going to get personal. I don't know who Sober Jeff is. I don't even know if I like that guy. On Drugs is available now wherever you get your podcasts. Mr. Gonzalez, he was a nice young man. I don't think that he viewed what he did as necessarily completely criminal. I don't think there was much of a guilt complex going on there with that. He didn't feel guilty about what he was doing. This is one of the Secret Service agents who was part of Operation Firewall. For his safety, we can't tell you who this agent is.

He still works undercover. But when we started talking to him, you could realize what an intelligent, for the most part, friendly, affable young man that he was. And so he sort of led us on a tour of how the organization worked and the things that were available to really any member of the general public. A capture of Shadow Crew's website on the Wayback Machine comes complete with a soundtrack. It's a basic, mainly black page. Messages in small print shoot across the screen, giving people a heads-up on what services they provide. Novelty identification, ID supplies, holograms, and more.

Then it says, join the crew. The scope of it was so massive, and the number of credit card numbers, the amount of personally identifiable information and stolen payment card data that was out there was just tremendous. Pretty quickly, they get Albert, Kumbhajani, back online, so everything looks normal. But secretly, the agency takes over Shadow Crew's website. The bust is kind of legendary.

Just in the past few years, CNN made a documentary about it called Operation Firewall, the takedown of Shadow Crew. We can't arrest mint floss, velour, or Scarface. You can't arrest somebody if you don't know who they are. Many of the Shadow Crew members had never talked to each other, had never met in person. Their interactions were completely online. Most of their efforts went into anonymity. We needed to take the digital world and push it into the physical world if we were really going to take this down. So the Secret Service keeps watch over the top dogs in the organization. At first, getting to know them by their aliases.

So a couple screen names that we started looking at, one was Jaden and one was Valour, which I believe is a French word for thief. And this individual was well known for posting different sort of money laundering services on the ShatterCrew website, trying to solicit business and to help offer people solutions and information on how they can monetize safely their criminal activity. And the guy stood out. He was brazen, the agent says. Looking back at some of his posts online on the website, he certainly had more of a, I would say, like a business person's approach. His were very informational about how people basically can launder money and make it look more legitimate in a very sort of thoughtful, more academic manner. So his posts tended to be a little bit longer, a little more, you know, explanatory of what he was suggesting and offering.

Having infiltrated their ranks, the undercover agents interacted with Valour, who also went by Jaden. They were waiting for him and the others to trip up. That maybe they would log on forgetting to hide their IP address. Anything to reveal something about who they really were. In Omar's case, agents would come to see a pattern.

He was using the name Patron in communicating with the bad guys. The Secret Service agent didn't want to get into details around how exactly they ID'd him. But they were able to connect the dots to uncover Omar Danani's true identity, his and dozens of others. Then on October 26th of 2004, Albert Gonzalez is apparently instructed by the Secret Service to trick the leadership of Shadow Crew into a chat room for a meeting. And with everyone in front of their screens at the exact same time, in places like the U.S., Britain, Poland, and Canada, law enforcement agencies moved in. It was a spectacular bust.

One guy ends up jumping out of a window onto a roof trying to get away. Of course, they got him. One guy's got an AK, I think it was an AK-47 that they ended up getting from that guy. Another guy is actually driving at that point. If you look at it, I mean, it's impressive as hell. It truly is. They did an outstanding job of trying to coordinate all these arrests at the same time. So they-

28 people were arrested internationally. Volor, or Omar, was one of them. They were the big fish. They'd trafficked 1.5 million stolen credit and bank card numbers on their website, shadowcrew.com. You know, we shut it down. One of our folks put a little message up, basically sort of a new cover page for it, so whoever went to the website would see more more or less, that the takedown had occurred. Not only that, reports at the time said the Secret Service even added the extra flourish of including the theme music from the show Mission Impossible.

Sort of just posted a warning to the people committing fraud that the government wasn't going to sit back and let them continue doing it. They changed the website. We had a catchphrase that said, for those who work in the shadows, I think was the catchphrase. The Secret Service, they changed that. They put a new picture on a guy behind bars. They've got all the law enforcement little symbols there on the site and everything else. And the new catchphrase is, you are no longer safe in the shadows. There's a warning in all caps.

The Secret Service is investigating your criminal activity. Several arrests have recently been made, with many more to follow. Everyone on the planet that was engaged in criminal activity saw that, and, you know, this cold chill kind of runs through you when you see something like that. Like, okay, maybe we're not as safe as we thought we were. Brett wasn't grabbed in that sting. He says by then he'd left Shadow Crew.

Omar was not as fortunate. In 2005, on the day after his 22nd birthday, he pleaded guilty to his role in a conspiracy to commit credit card and identity theft. Omar was sentenced to 18 months in prison. He was also given a $1,000 fine. And the folks that tend to do this tended to be on the younger side, you know, let's say under 30 or under 35, and they didn't view it as criminal. And a lot of them got fairly sentences that were lighter than what the guidelines would have prescribed back then, whether that's a result of society just hadn't come to grips

with the problem of identity theft, or some folks didn't view it as a real serious crime because it is sort of a paper crime, if you will. But it certainly set a precedent and showed how important and how much money was out there and being made by these criminals and that this was the new way that everyone was going to get hit financially. In May of 2007, Omar Danani gets out of prison. But he's not free of the legal system. The next month, Omar is back in court, entering guilty pleas for a whole host of prior offenses.

Grand theft, money laundering, computer fraud, threatening extortion, drinking and driving. Part of a plea deal, we're told, that would see Omar Danani deported to Canada. So by 2009, Omar is back in Canada. We know this because of a U.S. court filing that was made in the fall of that year. A petition to end efforts to get Omar to cough up the rest of that $1,000 fine. He'd paid just $25. Three years on, no one was holding out hope of a check coming from over the border.

In Canada, Omar starts over again, promoting digital currencies. He starts an exchange called Midas Gold under the name Omar Patran. He'd officially changed his surname in Canada years earlier. From his website mgold.com, Omar would sell digital currencies for a business out of Costa Rica called Liberty Reserve.

It offered the utmost in anonymity for its clients. There were layers of protection. Customers couldn't buy from Liberty Reserve directly. Here's Amy Castor, the freelance journalist in L.A. They have to go through these intermediaries called exchangers. So Midas Gold was an intermediary. They bought Liberty Reserve, LR, in bulk, and then they would sell it to people for actual dollars.

So you send Midas Gold dollars, your fiat money, and they'll fund your Liberty Reserve account with LRs, right, that you can then use to buy stolen identities, stolen credit card numbers, whatever you want on darknet markets. To Courtney Regan, Rao, with some breaking news about U.S. authorities. CNBC reported the takedown of Liberty Reserve. You know, it could be the largest international money laundering prosecution in history. And charges are going to be announced any moment now in New York City. And that dozens of websites were shuttered.

Now, the main guy behind Liberty Reserve, Arthur Badowski, was arrested and he was charged with running a $6 billion money laundering enterprise. Basically, the Liberty Reserve domain was seized, and authorities also seized more than 30 domains registered as Liberty Reserve exchangers, including mgold.com. No one with Midas Gold ever faced charges, but the business was over. This was the spring of 2013. This Liberty Reserve case would catch the attention of QCX Int in the months following Jerry's reported death.

Remember, he's the customer-turned-sleuth who's been following the digital data trail left behind by Kudriga's co-founders. He requested the court documents from the U.S. Man, there are a lot of documents. So it actually ended up being a few hundred dollars. But I'm glad I did because there's a lot of good stuff in there. You know, it was a little bit of a long shot going through that data, but I got a hit. Buried in hundreds of pages of legal documents, he could see Midas Gold had been listed as one of the exchangers for Liberty Reserve and that Omar Patran was named. But then he made a striking discovery. Patron was named.

But then he made a striking discovery. The contact provided for mgold.com was Gerald Cotton, an email address he was known to have used. But the Midas Gold account was in Gerald Cotton's name, and it was in Gerald Cotton's email address. It was his Gmail address. So again, you've got this great data point that's been verified in court filings. And so, you know, the trail really starts to kind of unfurl from there. For QCX Int, the suggestion that Michael Patron was not the same man as Omar Dunani

was ludicrous. The revelation made him even more committed to his hunt for justice. Yeah, it did become more about being outraged. Yeah, a real sense of outrage, I think, that these guys were running around out there and just ripping people off and getting away with it. And, you know, I thought, well, I can do something here and I've got a lot of data and I'm going to put all this together and put it out there and put it in the hands of law enforcement

and see if it makes a difference. and put it out there and put it in the hands of law enforcement and see if it makes a difference. So while QCXint was carrying out his investigation, sharing his findings with police and reporters, Aleksandr Pozadski and Joe Castaldo from the Globe and Mail would continue their own hunt for answers. And as they wait for that mugshot of Omar Danani, they take stock of what they already knew.

So there were just a lot of really strange coincidences between Omar Danani in the U.S. and Michael Patron in Canada. For instance, they have the exact same birthday, November 16th, 1983. Omar Danani's dad, his name is Nazman. Michael Patron formed a company in Canada. And one of the directors is Nazman Danani, which was strange. And of course, there's always the possibility that there's, you know, more than one Omar Patron or more than one Michael Patron or more than one Omar Danani out there. And so how do you prove that it's the same guy that had been doing

all these things? But it's still, we still wanted something more clear, you know, because it's a, it's a big thing to put out a story saying this guy's been hiding a criminal past for all of these years. Then the booking photo arrives from the New Jersey prison where Omar Dhanani had spent time. The mugshot is of a 22-year-old Omar Dhanani. He has just a bit of facial hair, a patch of beard that barely covers the bottom of his chin. He's facing forward, but his dark brown eyes are looking off to the left. Alexandra and Joe compare it to a screen grab of Michael Patron. The shape of the face, even the serious expression, is similar. In the Omar photo, the cheeks are fuller. And in Michael's, the beard is slightly more filled in.

I mean, obviously a lot of time passed between the two photos, the booking photo and the screenshot we have from a YouTube interview, are about 10 years apart. And I do remember sitting in the newsroom with Alex and another editor, like studying these photos of Michael Patron and Omar Dhanani. And one of the editors said, you know, look, there's a pockmark on his forehead,

you know, and there's a pockmark on Michael Patron's forehead. And for some reason, that little tiny detail was like, okay, like we have it. Like we have all this information we have these photos it's clearly the same person so on the final day of february 2019 their story comes out the headline reads quadriga co-founder served time in u.s prison for role and identity theft ring, documents reveal.

Further proof would come later. The pair would obtain documents showing a second name change. This time, Omar Patron would legally change his name to Michael Patron. Yeah, so Liberty Reserve is shut down in May 2013. That sort of puts Michael Patran out of business in terms of running that exchanger. But soon after that, he and Gerald Carton sort of meet up in Vancouver and they start going to Bitcoin meetings. So you can see that the timeline here, May 2013, Liberty Reserve is shut down.

And then just months later, Quadriga is set up. And then it's launched in December 2013. And they're off and running. December 2013. And they're off and running. Michael Patron has only spoken with the media once since the collapse of Quadriga. In 2019, just after it was announced that

Gerald Cotton was dead, he spoke to our colleague Yvette Brend. She asked him if he'd ever gone by the name Omar Danani. No, I did not. So where did that even come from? It seems to be a bunch of jumps and assumptions, a last name in common, a contact in common.

I'm not really sure. It seems like this other person was convicted of selling digital currency on a darknet 16 years ago and worked with the same person that I worked with Right, so you have nothing to do with him. It's basically just... I'm assuming that's why it became so popular, especially now when people are looking for someone to blame. When Yvette contacted him again for our podcast, more than a year later, he finally acknowledged that he'd done time in a U.S. prison. He wrote,

Having served a few months in a foreign country for a white-collar crime 17 years ago is generally considered to be an unfortunate part of your childhood that you suffered the consequences for. Not a lifelong badge of dishonor. For months now, we've been asking Michael Patron to do a taped interview with us. He's turned us down. But in response to our questions about his childhood years, he denies everything. The burrito scam, the fancy car, and the X-Men cards. Michael insists that his past isn't relevant to this story. But while he parted ways with

the company in 2016, he was still a beneficial shareholder of Quadriga through his company Crypto Consulting Group. Court documents say he held just over 18% of its shares. He says he's a victim in all this. He told us he's down hundreds of thousands of dollars. A final thing Michael wrote to us was, My involvement makes for a good story, but in reality, I was long gone before anything nefarious happened. For customers, this is of little consolation. Because, as we'll discover, something nefarious did happen at Quadriga CX. And they were in the dark until it was too late and their money was all gone.

Next time on A Death in Cryptoland. We sort of knew that there was a lot of funny business going on at Quadriga. We didn't know what was happening internally. So what we learned was that Gerald Cotton began to set up these fake accounts, that he would give them crazy names like R2-D2, C-3PO, Scepter Jerry, and he would fund them with fake assets. He just did whatever he wanted. Quadriga was just his money to play with. is hosted by me, Takara Small, and written and produced by Joan Weber and Enza Uda.

Eunice Kim is our associate producer. Sound design by Natasha Aziz and Graham MacDonald. Our digital producer is Emily Connell. Special thanks to Dave Downey, Cecil Fernandez, and Yvette Brend. Legal advice by Sean Moorman and fact-checking by Emily Mathieu. Chris Oak is our senior producer, and the executive producer of CBC Podcasts is Arif Noorani. For more CBC Podcasts, go to cbc.ca slash podcasts.